• Gold recovers after the release of worst-than-expected US Jobless Claims data. 
• Despite higher inflation data suggesting interest rates might remain high, the jobs data indicates the opposite.
• Technically, XAU/USD returns to its range-bound mode as it unfolds a leg back higher. 

Gold (XAU/USD) recovers to trade back in the $2,630s on Friday as subpar United States (US) jobs data cements expectations that the Federal Reserve (Fed) will cut interest rates at their November policy meeting. The anticipation of interest rates falling is bullish for Gold as such an occurrence would reduce the opportunity cost of holding the non-interest-paying asset, making it more attractive to investors. 

Gold rallies after US jobs data

Gold rebounded from just above the key $2,600 psychological level on Thursday after the release of official US Jobless Claims data showed a surprising spike in the number of people claiming unemployment benefits. US Treasury yields dipped after the release, the US Dollar (USD) marginally weakened and Gold got a lift.

US Initial Jobless Claims in the week ending October 4 rose by 258K, above the 225K of the previous week and expectations of 230K, data from the US Bureau of Labor Statistics (BLS) showed. The rise in initial claims was well above the average, although this might have been caused by the exodus from Florida ahead of the impact of Hurricane Milton, according to Bloomberg News. 

Continuing Claims for the week ending September 27 rose to 1.861 million, higher than the revised-down 1.819M  of the previous week and roundly above the 1.830M estimate. 

Overall, the data showed weakness creeping into the jobs market, which is likely to keep the Fed on track to cut interest rates (in order to stimulate borrowing and job creation) at its November policy meeting. In August, Fed Chairman Jerome Powell signaled he was shifting his focus from inflation to the Fed’s other mandate: “full employment”.